Binance's founder, CZ, suggests the implementation of a Decentralized Exchange (DEX) aimed at blocking practices like front-running.

Scoop: Binance CEO Unveils Stealthy DeFi Solution to Safeguard Traders

Binance's founder, CZ, suggests the implementation of a Decentralized Exchange (DEX) aimed at blocking practices like front-running.

In the limelight

• Binance founder Changpeng "CZ" Zhao has pitched a cutting-edge decentralized exchange (DEX) concept as a covert trading haven, aiming to shield users from cunning market manipulation and unscrupulous front-running.
• The idea, dubbed a "dark pool DEX," intends to plug the transparency loopholes in current DEXs that leave user trades and liquidation points vulnerable to exploitation.

What's the Buzz all about?

• Traditional finance's "dark pools" serve as potential inspiration, where trade orders remain hidden from the public view until they're executed, safeguarding large trades from rival manipulation.
• The dark pool DEX concept is tailored for perpetual futures trading, where the stakes are higher due to visible liquidation points' vulnerabilities. This stealthy shield ensures protection from orchestrated attacks triggering liquidations.

Zero-Knowledge Locks for Privacy and Security

• CZ has hinted at the implementation of zero-knowledge proofs (ZKPs), which verify transactions without exposing sensitive information, thereby preserving user privacy while upholding the exchange's trustless nature.

Trust Essence: Trustless and Non-Custodial

• In keeping with DeFi's ethos, this proposed DEX is designed to be trustless, requiring no central authority for trade execution, and non-custodial, meaning user assets are never held by the platform.

Atomic Swaps - A Missing Link?

• Despite no explicit mention of atomic swaps in the current proposal, it may find its way into future iterations to promote cross-chain interoperability. Atomic swaps facilitate direct, intermediary-free transactions between users across blockchains[1][2][3].

Beating the Front-runners

• Byard Shekhawat, Global Ecosystem Lead at Avail, backs CZ's proposal, claiming it "sets the stage for the next frontier in DeFi infrastructure." Shekhawat emphasizes that current DEXs reveal too much to traders, from real-time order visibility to predictable liquidation points, benefiting MEV bots but deterring serious traders[1][2].
• In March, CZ launched his paid messaging platform, ReachMe.io, to tackle overwhelming message volume, gradually increasing fees to weed out spam and ensure focused dialogue with developers[1].

[1] Decrypt

[2] Cointelegraph

[3] Blockchain Reporter

[4][5] Enrichment Data: Binance CEO Proposes Dark Pool DEX to Safeguard Users from Front-Running and Manipulation

• The proposed DEX is modeled after traditional finance's dark pools, where trade orders are not publicly visible until executed, safeguarding large trades from rival manipulation.
• The dark pool DEX is specifically designed for perpetual futures trading, where the stakes are higher due to visible liquidation points' vulnerabilities. By hiding these points, traders are protected from coordinated attacks that could push prices to trigger liquidations.
• CZ suggests using zero-knowledge proofs (ZKPs) to ensure the privacy and integrity of trades. Zero-knowledge proofs allow for the verification of transactions without revealing the underlying data, thus protecting the privacy of traders while maintaining the trustless and non-custodial nature of the DEX.
• The proposed DEX is designed to be trustless, meaning that users do not need to rely on a central authority to execute trades. Instead, transactions are secured through cryptographic techniques like ZKPs. The DEX does not hold user funds, ensuring that users maintain control over their assets at all times. Aligning with the principles of decentralized finance (DeFi), users are not required to trust a central custodian.
• Potentially, atomic swaps (a technique used in some DeFi platforms to facilitate cross-chain transactions directly between users without intermediaries) could be integrated for future enhancements in the DEX design, promoting cross-chain interoperability.

1. Binance CEO Changpeng "CZ" Zhao revealed a novel concept for a decentralized exchange (DEX), dubbed a "dark pool DEX," aiming to safeguard users from market manipulation and front-running, inspired by traditional finance's dark pools.
2. The dark pool DEX is tailored for perpetual futures trading, intending to plug transparency loopholes and protect from orchestrated attacks triggering liquidations.
3. CZ suggested implementing zero-knowledge proofs (ZKPs) to preserve privacy and trustless nature in this proposed DEX.
4. This DEX is designed to be trustless and non-custodial, requiring no central authority for trade execution and holding no user assets, aligning with the principles of Decentralized Finance (DeFi).
5. Despite no mention of atomic swaps in the current proposal, it may emerge in future iterations to promote cross-chain interoperability, facilitating direct, intermediary-free transactions between users across blockchains.
6. Byard Shekhawat, Global Ecosystem Lead at Avail, lauded CZ's proposal, claiming it sets the stage for the next frontier in DeFi infrastructure, with potential benefits for serious traders by concealing real-time order visibility and predictable liquidation points from competitors.
7. In March, CZ launched his paid messaging platform, ReachMe.io, to combat overwhelming message volume, subsequently increasing fees to deter spam and promote focused dialogue with developers.
8. The proposed DEX conceals trade orders until executed, hiding liquidation points, thereby safeguarding large trades from rival manipulation, thereby finding its footing in the cryptocurrency and finance industry's rapidly evolving decentralized technology landscape.

Read also: